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Morgan Stanley to pay Merrill $1 mln after raid

By Joseph A. Giannone NEW YORK, Nov 12 (Reuters) - Morgan Stanley was ordered by arbitrators this week to pay Merrill Lynch nearly $1 million in damages for its role in recruiting a team of Merrill brokers in Bozeman, Montana, last year. Last summer Morgan Stanley Smith Barney hired a team of brokers led by William Claridge and Patrick Lewis to join its Billings, Montana, office. The team had generated more then $1.4 million in fees and commissions from clients with $215 million in assets during the previous year. Merrill challenged the hires in June last year, accusing Morgan Stanley of raiding and unfair competition and said the brokers were guilty of breach of contract and breach of fiduciary duty. Morgan Stanley denied the claims. Arbitrators on Tuesday ruled that Morgan Stanley was solely liable and would pay Merrill $552,875 in compensatory damages, $400,000 in punitive damages and about $16,000 in fees. Merrill's claims against Claridge, Lewis and three other brokers were denied. "We disagree with the ruling and do not believe it was supported by the facts," a Morgan Stanley spokesman on Friday. As is customary with all Financial Industry Regulatory Authority arbitration rulings, the panel did not disclose the reasoning behind its decision. Claridge had worked at Merrill for more than 22 years, while Lewis spent more than 13 years at the brokerage, a unit of Bank of America Corp. Merrill Lynch officials were not immediately available for comment. (Reporting by Joseph A. Giannone; Editing by Derek Caney) Keywords: MORGANSTANLEY/MERRILLLYNCH (joseph.giannone@thomsonreuters.com; +1 646 223 6184; Reuters Messaging: joseph.giannone.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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